Our Perspective

Nepal Leaps Forward in Climate Finance Visibility

Nepal is truly leading the way in climate finance. This is a hugely significant step forward for transparency and accountability in Nepal and is critical in a region so vulnerable to the effects of climate change.

Nepal is providing innovative leadership in Asia and the Pacific in integrating climate change into budgets

Important leaps forward in sustainable development aren’t always dramatic. Some people think of the key moments in development being big humanitarian interventions or sweeping logistical feats but there are a lot of important changes that happen quietly – making big impacts without the pomp and bombast.

On a recent trip to Nepal, I suddenly found myself in a moment in which one simple action represented a critical step forward for accountability and action in addressing the challenges of climate change.

I watched on as operators in government ministries showed how they could produce, with the press of a button, realtime budget information on climate change expenditure in the country. It might not sound like much at first, but this is a huge achievement for sustainable climate action from the government and represents a groundbreaking leap ahead for Nepal.

Let me explain why.

Nepal struggles with climate change more than most countries and you don’t need to read the numerous studies to understand its disastrous impacts. As a small example, on my very first visit to that beautiful country, the first newspaper article I read on the way from the airport was on a glacial lake outburst flood (GLOF) that led to a number of deaths in a village.

A GLOF is what happens when the debris that has dammed massive mountain lakes of glacial meltwaters for centuries, gives way, unleashing a torrent of water that snakes through the valley below, wiping out entire villages in its path.

Global warming is causing glaciers to melt at ever-faster rates, and the rising build-up of water in lakes across the Himalayan range has meant a rising frequency of GLOFs.

Responding to these impacts and addressing climate change requires real change in the way we operate and governments around the world acknowledge the urgent need to directly integrate climate considerations into most routine activities. This means that activities from infrastructure development to agriculture now need to take climate change into account at all stages.

Public finance is the clearest ‘entry point’ to include these climate considerations. Public finance and budgets are an essential and most influential means to re-adjust processes so they are no longer ‘climate-blind’. Therefore, it’s critical to make budget decisions and priorities much more climate change informed.

But how do budgets become more climate informed?

The first step is coding what allocations in a budget count as relevant to climate change. Nepal was, again, the first country to introduce a climate change budget code that allowed users to see the level of climate relevant budget allocations from 2014.

However, knowing what climate allocations are is just the first step. The system lacked the critical next step, which is the inclusion of information on actual budget expenditures that are climate relevant. Without having a clear picture of actual expenditure, it is difficult to have real accountability and informed budget decision-making processes.

So, at the end of 2016, the UNDP team I’m a member of, the Governance of Climate Change Finance programme, helped the government of Nepal adjust this budget database system and by early 2017 the government was able to generate its first climate change expenditure reports based completely on its own data systems and processes.

That was what I saw happen – when the operator in the Ministry of Finance hit that button to extract an instantaneous and updated report on climate expenditures in the country.

The benefits of this are immense.

Domestic expenditure reporting processes are not only now much faster to produce but are also more reliable in terms of data accuracy as they derive from the same budget database as the rest of the budget.

Nepal is no longer reliant on donors or development partners to undertake reports and research to give them an indication of the government expenditure and can, instead, generate this information themselves. This independence and sustainable self-sufficiency is what all development programmes aim for: creating lasting solutions that governments can implement without on-going assistance from development partners.

Also, this information isn’t just useful for civil servants. Civil society organizations, the media, members of parliaments and others are now able to improve their advocacy and oversight of climate expenditures with the data being produced.

Krishna Sapkota of the Freedom Forum, a local CSO specializing in budget analysis and transparency, said of the advancement, “the reports make it easier for groups like Freedom Forum to follow the money and generate evidence for public spending accountability. Finding discrepancies between allocations and expenditure enable the demand side to figure out what is happening with public money. This is a very important initiative of the government towards strengthening public financial management in Nepal.”

Nepal is truly leading the way in this work along with many countries in the region following suit. This is a hugely significant step forward for transparency and accountability in Nepal and is critical in a region so vulnerable to the effects of climate change.

That is how real progress on sustainable development is often made: quietly, by individuals carrying out their work innovatively and diligently and making progress that other countries can begin to follow.